July 16, 2012

International Tax Misery Index

Well aware that I'm risking graphic chart overload here, I couldn't resist posting the graph below showing the combined total, in percentage points, of corporate income tax rate, personal income tax rate, employer SS tax rate, employee SS tax rate, VAT/sales tax rate and wealth tax rate for the countries that have such a thing. Sixty-one countries are listed, including China. Since both corporate and personal taxes are listed I suppose the theoretical maximum index score is 200, or 100 percent of personal income plus 100 percent of corporate income. But this is no justification for US federal government confiscation of 42.65 percent of both personal and corporate income. (61.6% and 53.9% in NYC when state and local taxes are included.)

Of sixty one nations, four have a TMI below 52 points: Qatar, UAE, Hong Kong and Georgia. The rest start at 70 points and go up from there. I find it mind boggling that Americans take to the streets to protest taxes that approach 50 percent, while Frenchmen sit still for tax rates of 79.4% on corporations and 86.7% on individuals. I realize these are top marginal rates, paid only by evil "one percenters" and corporations. Nonetheless...

And despite the second highest Tax Misery Index in the world, China is still better disposed to make American Olympic Team costumes. (Perhaps this is better explained by an average US hourly compensation cost of $34.74.)

After posting I realized that while this chart is eye-catching it doesn't really give much information. The figures listed are tax rates, not revenues, and top marginal rates at that. The chart shown at this Wikipedia page can be sorted by 2012 Heritage Foundation tax revenue as percent of GDP thus revealing:

China - 17%
USA - 26.9%
France - 44.6%

And thus proving my original thesis, that manufacturing in the USA is more difficult because of government imposed costs.